OPINION, P8 ECONOMY, P2 SHOBHANA SUBRAMANIAN Taking RBI’s funds is inflationary and will drive yields up INTERNATIONAL, P14 CHANDRA BHUSHAN PNB FRAUD AHEAD OF US MIDTERMS Use DMF funds to secure the future of those employed in the coal sector ED attaches 11 properties of Nirav Modi in Dubai Zuckerberg-led Facebook blocks 115 accounts NEW DELHI, WEDNESDAY, NOVEMBER 7, 2018 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL.XLIV NO. 214, 20 PAGES, `6.00 (PATNA `6.00, RAIPUR `7.00) P U B L I S H E D F R O M : A H M E D A B A D , B E N G A L U R U , C H A N D I G A R H , C H E N N A I , H Y D E R A B A D , K O C H I , K O L K ATA , L U C K N O W, M U M B A I , N E W D E L H I , P U N E SENSEX: 34,991.91 ▲ 40.99 NIFTY: 10,530.00 ▲ 6.00 NIKKEI 225: 22,147.75 ▲ 248.76 HANG SENG: 26,120.96 ▲ 186.57 `/$: 73.00 ▲ 0.12 `/€: 83.20 ▼ 0.03 BRENT: $73.20 ▲ $0.03 GOLD: `31,773.00 ▲ `34.00 IN THE NEWS CCI rejects price fixing allegations against Ola, Uber CCI ON TUESDAY rejected allegations of price fixing against app-based taxi service providers Ola and Uber, saying that drivers acceding to "algorithmically determined prices" by the platforms does not amount to collusion between them. In a 13-page order, the Competition Commission of India (CCI) also dismissed complaints that Ola and Uber are imposing a resale price maintenance system on the drivers as well as alleged price discrimination. CSR: MCA notice to 300 firms over non-compliance THE MINISTRY of corporate affairs has issued preliminary notices to nearly 300 companies for not complying with corporate social responsibility (CSR) spending requirements under the companies law for the year 2015-16, a senior government official said, reports fe Bureau in New Delhi. For 2014-15, prosecutions against 254 were sanctioned, of which 33 firms have filed applications for compounding, the official said. India aims to sign pact with Iran for oil payments in ` INDIAAIMS to sign an initial agreement with Iran this month to settle all their oil trade in rupees through India’s UCO Bank, two Indian government sources said, reports Reuters. “We have to do some paper work. It should be signed as early as possible. We are aiming for this month,” a source said. RAJANSPEAK RBI’s the ‘seat belt’ if govt the driver, says former guv ‘Don't dig deep into central bank reserves’ ‘RBI’s board must keep off operational decisions; extraordinary dividend by central bank could stoke inflation and up interest rates; govt right on NBFC liquidity issue’ FE BUREAU New Delhi, November 6 unprecedentedlyhighamount from RBI its“surplus reserves” as dividend, Rajan reiterated that RBI ought not to pay “more than profit,” and added thatextraordinarydividendby itwould lead to an inflationary situation and consequent rise in interest rates.“There are no free lunches with dividends... there is no `3 lakh crore (the amount some reports say the government sought) to givetothegovernment.Giving dividend and then sucking out liquidity will not change the borrowing programme,”he said. EXPERTS HAVE CAUTIONED against dipping into the contingencyreservesofthecentral bank without careful analysis. Both the government and the Reserve Bank of India (RBI) should hold stakeholder consultationsifdifferencesintheir approach persist,theyadded. ExtraordinaryRBIdividend would mean that the central bank pays more than its realised profits to the government; this could mean printing notes, fanning inflation and lead to increase in interest rates,some of them warned. Pronab Sen,National Statistical Commission ex-chairman told FE:“There is no one way or theother.Boththeparties must sittogether,hammeroutdifferencesandworkoutaframework on which the transfers must be based.” In case of persisting differences, they can consult broader stakeholders and a committee can be set up (just like the Malegaon panel earlier) to reviewthe existing norms. SujanHajra,chiefeconomist at Anand Rathi Securities, said if a portion of the currency and gold revaluation account is transferredtothegovernment, it will be some kind of monetisation of government deficit. Continued on Page 2 Continued on Page 2 FE BUREAU New Delhi, November 6 FORMER RESERVE BANK of India (RBI) governor Raghuram Rajan on Tuesday waded into the ongoing tussle between the RBI and the finance ministry, giving solid support to the central bank’s assertion of its autonomy and opining that its board would do well to keep the tradition of not taking ‘operational decisions’ and only giving wise counsels in the interest of overall institutional health. Rajan’s views could weigh in favour of the RBI brass, which is set to hammer out a clutch of contentious issues including the way the RBI is governed, with an insistent group of government nominees on its board as it meets next on November 17. In separate teleconference interviews given to two Indian TV channels from the US, the formerIMFchief economist — who many believe left the RBI in September 2016 ending a three-yeartenureatitshelmas The RBI cannot pay more than realised profits as dividend... On a rainy day, it helps to have one entity in the market that is well-capitalised — RAGHURAM RAJAN, FORMER RBI GOVERNOR the NDA government was not keen on his continuing — however, seemed to back the government on how to resolve the current cash crunch in the non-banking financing sector — via injection of liquidity facilitated by RBI. Also,while the government is weathering political heat over the Prime Minister’s Office (PMO) allegedlynot acting promptly on a list of large defaultersofbankloanssentto itbyRajanwhenhewastheRBI governor, he told ET Now he saw “the political will to bring frauds to book”. While a fiscallyconstrained government is seeking an VEHICLE LOANS Special Feature How dynamic asset allocation ensures superior returns NSE has launched two dynamic asset allocation indices: NIFTY 50 & Short Duration Debt-Dynamic P/B index and NIFTY 50 & Short Duration DebtDynamic P/E index ■ Personal Finance, P13 QuickPicks NCLAT to hear IndusInd Bank’s plea to recover `25 cr from IL&FS THE NATIONAL Company Law Appellate Tribunal (NCLAT) on Tuesday agreed to hear IndusInd Bank's plea seeking to recover an interest payment of `25 crore from Infrastructure Leasing & Financial Services (IL&FS). IndusInd bank, which has an exposure of over `3,000 crore, said it would have to classify the company's account as a non-performing asset, if the interest part is not paid, report Surya Sarathi Ray in New Delhi and Rouhan Sharma in Mumbai. PAGE 6 Sebi lays down framework for securities transfer in physical mode MARKETS REGULATOR Sebi on Tuesday put in place a standard framework for transfer of securities in physical mode in a bid to address the difficulties faced by investors in transmission of such shares, reports PTI. The regulator has noted that registrars to an issue and share transfer agents (RTAs) are seeking various documents for effecting transfer of securities and the documents sought vary across such RTAs. PAGE 10 GST: Exporters prefer online refund route despite upfront payment EXPORTERS UNDER the goods and services tax (GST) regime are favouring the fully online system of refund of integrated GST over the traditionally used methods of claiming refunds of accumulated input tax credit (ITC), reports Sumit Jha in New Delhi. The preference is owing to the former option being expedited and involving little cost despite the requirement for upfront payment of integrated GST, which can cause cash flow issues especially for smaller exporters, experts told FE. PAGE 2 Low auto sales slow down festive demand at banks SHRITAMA BOSE Mumbai, November 6 TEPID SALES OF cars and bikes during the Navratra festival period and even ahead ofDiwalihaveresultedinadull festive season for banks. Most bankers concede that disbursements of auto loans have been slower this time around compared with 2017. The Navratri-Diwali period is typically the peak season for growth invehicle loans. Amid the gloom,State Bank of India (SBI) has waived prepayment penalties for auto loans,in addition to the waiver on processing fees that it offers every year.Those taking a personal loan from SBI need not payprocessingchargeseither.It has also reduced by 25 basis points (bps) the spread over ■ Auto loan growth has fallen up to 25% in metros this festive season ■ SBI has waived pre-payment penalties for auto loans, in addition to processing fee waiver ■ Demand for auto loans may have picked up in late October ■ Home loan growth has been flat y-o-y marginal cost of funds-based lendingrate(MCLR)chargedfor home loans of over`35 lakh. SBI managing director PK Guptasaidwhileautoloanshad slowed,therewasgooddemand for personal loans.“The numbers are slightly lower compared with last year as far as auto loans are concerned. But personal loans are seeing good demand.Wehavealsolaunched a pre-approved personal loan productonourYonoapp,which has been seeing good demand, too,”he said. Some bankers do see loan disbursements picking up in late October. Ravi Narayanan, senior GM (home and vehicle loans) ICICI Bank, said demand had improved in October last week. Continued on Page 2 Ringing in Diwali Uttar Pradesh CM Yogi Adityanath, South Korean First Lady Kim Jung-sook and Union minister VK Singh pose for photos with artistes dressed as Lord Ram, Sita and Laxman, ahead of grand Diwali celebrations, in Ayodhya on Tuesday Related report on Page 18 TAKING GOVT CUE RBI relaxes ECB norms; infra firms to benefit most New rules to make it slightly cheaper for Indian companies to tap overseas debt markets GUIDELINES EASED ■ The minimum average FE BUREAU, New Delhi, November 6 RESPONDING TO THE government’s suggestion that overseas borrowing norms be relaxed, the Reserve Bank of India (RBI) on Tuesday eased the rules under the ECB (external commercial borrowing) framework. The new rules will make it slightly cheaper for Indian companies and banks to tap the debt markets overseas. In recent months,the cost of borrowings in markets abroad has maturity for ECBs in the infrastructure space changed to 3 years from 5 years earlier ■ Borrowings of above five years will now be exempt from the mandatory hedging provisions, versus loans of 10 years earlier gone up, partly because of the spike in interest rates in the US and also because the spreads have widened, especially for companies in the emerging Samvat 2074 FE BUREAU Sensex, Nifty end higher The benchmark indices on Tuesday ended a highly volatile session in the green on firm Asian cues, finishing Samvat 2074 higher by over 7%. Sensex gained 2,407.56 points, or 7%, in the Hindu year, while Nifty rose by 319.15 points, or over 3%. ■ Report on Page 11 40,000 37,000 32,389.96 34,991.91 10,530 12,000 10,146.55 11,400 34,000 10,800 31,000 10,200 28,000 25,000 22,000 BSE Sensex Oct 19, ‘17 18,789.90 12,000 Nov 6, ‘18 17,265.65 BSE Midcap 14,728.09 Nov 6, 2018 BULL RUN Trump’s stock market performance best in 64 years REUTERS San Francisco, November 6 US PRESIDENT DONALD TRUMPhastakencreditforthe stockmarket’sgainsduringhis nearly two years in the White House, and those claims are reasonable given the impact of tax cuts and pro-business policies on investor sentiment. The S&P500 has risen 28% since Trump’s election in November 2016 to the eve of congressional midterm electionsonTuesday.Thissurpasses the market’s performance over thesametimeframeunderany other president in the past 64 years. Under President Dwight taxcodeinover30years,boostEisenhower, the S&P 500 rose ing US corporate earnings. 29% from Still, other sectors that his election in November 1952 through November1954. Sweeping corporate tax cuts, an initiative driven by Trump, supercharged US companies' earnings and helped lift the cash-rich technology sector. The Republican party last year passed the ILLUSTRATION: ROHNIT PHORE biggest overhauloftheUS could have been expected to benefit stronglyfrom aTrump presidency have lagged. Indeed, the individual stocks that have gained and lost the most during his reign have little discernable link to Trump’s presidency. How the market shakes out in the final two years of Trump’spresidency will probably be influenced by Tuesday’s elections. Analystsexpectpressureonstocksif Democrats gain control of the House of Representatives and a sharper PRESS TRUST OF INDIA New Delhi, November 6 Continued on Page 2 Oct 19, ‘17 NSE Midcap Oct 19, 2017 E-tail biggies Amazon & Flipkart claim bumper sales Continued on Page 2 NIFTY 50 17,000 16,076.42 ● FESTIVE BOOST downward reaction if they sweep the House and Senate. On the contrary,if Republicans hold their ground, stocks could gain further,with hopes of more tax reform ahead. The following graphics show how the Trump presidency has played out on a macroandmicrolevel:Trump’s strongstockmarketrecordhas been maintained even after a recent pullback on Wall Street as worries about trade battles, inflation and rising interest rates have increased caution among investors. 9,000 19,500 14,500 Continued on Page 2 WITH FESTIVE SALES drawing to a close, e-tailing giants Amazon and Flipkart have claimed bumper sales on their platforms, and that they were ahead of the competition, as they received orders from customers from over 99% of PIN codes in the country. Citing a survey by Kantar IMRB and other reports,AmazonIndiaseniorvice-president and country head Amit Agarwal said Amazon emerged as “the most visited and transacted shopping destination in India this festive season” (October 10-15, October 24-28 and November 2-5). “With 99.3% of PIN codes placing at least one order,89% of new customers coming from smaller towns, almost 70,000 small and medium businesses getting at least one orderand newPrime memberships growing bynearly2X,we are humbled that India trusts us to find, discover and buy anything online,”he said. Asked about another report stating that Flipkart cornering 51% share of the festive sale between October 9-14, Agarwal said,“We don’t comment on reports that are based on non-scientific methodologies”. 9,600 Nov 6, ‘18 markets. In September, ECB borrowings totalled $1.7 billion, far lower than the $4.8 billion raised in August.In July,the borrowings were $2.2 billion. The central bank has reducedtheminimumaverage maturityrequirementforECBs in the infrastructure space, raised by eligible borrowers, from currently five years to three years. The hedging rules have also been relaxed. TheRBIsaidinarelease,the existing norms had been reviewed and amended in consultation with the government. From now on, borrowings of above five years will be exempt from the mandatory hedging provisions.Currently, borrowings of above 10 years do not need to be hedged.

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